This business of Israeli building contractors taking money for buildings that don't exist and then running away with the money is a very old story. "Builders" here have been doing this for decades. The Heftsiba case of the past few months was breathtaking in it's magnitude. THOUSANDS of buyers were swindeled out of their life savings and the culprit is now fighting extradition from Italy. Hundreds of families are living in underground shelters or have otherwise been rendered homeless and bankrupt. Oh, the law here has sided with the banks, giving them rights to claim and leaving the little people to sleep in the streets. That's what it's like in the "worker's paradise"...

There are some honest builders in Israel (hey, there are some honest Israelis period - not many though) but all of business in Israel is based on making the other guy the 'freier' and stealing from him. Once you recognize that it's a fundamentally Communist economy here, many other things start to make sense...
Jake in Jerusalem | 05.13.08 - 3:14 pm | #

"but all of business in Israel is based on making the other guy the 'freier' and stealing from him"

dittos on that one. even the bigger companys nickle and dime you like youre in some arab market. it boggles the mind how theyve got their eye planted so squarely on the small picture.
sto pratzent | 05.13.08 - 7:44 pm | #

And yet how to explain all those Israeli billionares and that Israel is one of the modern world's venture capital centers?
Zeitgeist | 05.14.08 - 1:11 am | #

On Israeli nickel and diming: The reason that Israeli corporations can focus profitably "on the small picture" is that the model of a successful Israeli business is that of a monopoly, without real competition. Then, you control much of the entire market and all the nickels and dimes add up. In this manner, banks charge you something on EVERY SINGLE TRANSACTION OR QUERY, even the smallest. Same with the phone companies, etc. How does one go about getting such a deliciously profitable monopoly? That's where 'friends in high places' come in. They legislate to prohibit competitors from entering and also to allow the existing monopolies to exploit the customer base as much as possible. The poor customer has no choices. Ask anyone who has an account at ANY Israeli bank what they think about their bank...

Now you can better understand the flurry of corruption scandals here.

As for explaining "all those Israeli billionaires", see the first answer. :-) These are people who OWN OR CONTROL major banks, food, energy and communications companies. Such concentration of ownership and wealth is rare in free and developed economies and serves the aristocracy at the expense of everyone else.

As for being a venture capital center, it's the same story. When you can set up a company somewhere where you can enjoy more lenient regulations on labor and environment, you can make more profit there. Things that are illegal in the USA (and might even be illegal in Israel) are common practice in Israel.

One giant company that has major manufacturing facilities in Israel guarantees most of their employees that their job will not be permanent and they shouldn't even THINK of it being a career position. It will never be more than a dumb factory job and they will be fired before they get any legal rights to permanent employment. This saves them lots of money and improves the bottom line.

The Israeli govt won't complain about this because the gov't engages in precisely the same practices! Cleaners in the Knesset are outsourced people, earning minimum wage or even less than the legal minimum. The Ministry of Education fires teachers at the end of the school year and rehires them after the summer vacation, just so that they won't ever accrue seniority and rights. Standard operating procedure.

Don't be so surprised that foreign investors rush to such places. They were rushing to Russia a few years ago, too. I'd guess for much the same reasons...
Jake in Jerusalem | 05.14.08 - 6:55 am | #

JIJ
"It will never be more than a dumb factory job and they will be fired before they get any legal rights to permanent employment. This saves them lots of money and improves the bottom line."

key words here are "legal rights to permanent employment"

if there were no legal "right" to employment many of these corporations would have plenty of incentive to hold on to existing employees for longer if for no other reason than retraining new people every other year which is very costly (there would be plenty of other benefits as well).

the reason they turn over their staff so frequently is precisely because of govt. regulation.
sto pratzeny | 05.14.08 - 9:23 am | #

oops make that sto pratzenT!
sto pratzent | 05.14.08 - 9:28 am | #

I am not an authority on Israeli labor law but you appear to be correct. The "socialist worker's paradise" has turned into something of a nightmare...
Jake in Jerusalem | 05.14.08 - 9:54 am | #